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Base metals are rising - of course - due to Chinese demand.
By PATRICK BARTA
March 16, 2006; WSJ, Page C1
With demand for copper sending prices higher, there is a worry for everyone
from mining companies to microwave-oven makers: the lack of new mother lodes
to tap.
In the 1990s, Chile emerged as the Saudi Arabia of copper. An era of political
stability there enabled foreign and domestic companies to extract epic deposits
of minerals, flooding the globe with supply. Soon Chile was producing more
than one-third of the world's copper, helping push prices down to less than
70 cents a pound.
Today, however, demand from China and elsewhere has kept copper-futures
prices above $2 a pound, even after a recent pullback. Chile's production
slipped about 2% last year, and meantime, new mines aren't being discovered
or exploited quickly enough to make up the shortfall....
But There's No Inflation
Copper not your bag? Ok, try
zinc,
Dwindling stocks push zinc to new record
By Darryl Thomson
Published: March 17 2006 11:27 | Last updated: March 17 2006 11:27
Zinc prices on the London Metal Exchange hit an all-time high of $2,450
a tonne, up $80, driven by falling warehouse stocks and market tightness.
The price has jumped 25 per cent this year...
We have a "bull market" in housing - which is an eloquent way to say 'prices
are rising' - because it's allegedly in short supply. Folks in hurricane ravaged
Louisiana, no doubt, would agree.
 In
the wake of Katrina: Empty FEMA Trailers in Arkansas
The price of sugar is on the move - because it is seen as an alternative to
fossil fuels - sweet, eh?
The unwieldy twin deficits of both the U.S. current and fiscal accounts are
widely reported as unproblematic and most certainly not inflationary. Does
anyone really believe the notion that the roughly 1.5 Trillion [combining the
current account with the fiscal deficit] worth of debt obligations being printed
each year by the U.S. Fed/Treasury is NOT inflationary? Incredulously, this
abhorrent orgy of money creation is positioned/reported in the mainstream media
as "doing the world a favor" by sopping up a glut of excess world savings.
Makes me wonder if the U.S. Government wasn't here performing this noble service
- consuming - for the rest of the world, interest rates might be at zero. Oops,
sorry - they already are in Japan.
New Dogs....Old Tricks
Speaking of Japan, the N.Y. Post's John
Crudele had this to say last week:
THINK PRICES ARE RISING? THE GOVERNMENT DISAGREES
March 16, 2006 -- WHO says we can't teach Tokyo a thing or two?
Japanese politicians apparently don't want that country to be known as the
Land of the Rising Prices, so they are digging into the U.S. playbook to
pull a fast one.
Market watchers already know that today's the day Washington will put out
its latest consumer prices, which are likely to fall right in line with the
0.1 percent that Wall Street is expecting.
It would a little worse if you included food and energy - but, hey, who
eats or drives these days?
The Japanese reported earlier this month that their consumer prices rose
0.5 percent in January from a year earlier, a number that roiled the world
markets, which are worried that Japan will start raising interest rates.
Japan imports all its oil. So it would be logical that the country would
suffer from some inflation.
Logic, however, doesn't really play a part in the game of economic statistics.
And there are academic theories aplenty that'll make bad numbers disappear
and good ones suddenly show up on the ledger.
And that's exactly what the Japanese are apparently planning to do in a
scandalous move that should - but never does - have the juices flowing in
investigative reporters everywhere.
Apparently not realizing the significance, here's what Bloomberg News recently
had to say about the Japanese finagle: "The government plans to adjust the
basket of goods used to compile consumer prices in August, probably to include
more consumer electronics items. Previous revisions lowered prices because
of declines in the costs of some of the items added."
I'm a fan of sleight of hand as much as the next guy but unless I've suddenly
come down with a case of the deaf, dumb and blinds it isn't right to fix
a problem simply by changing the perception.
Watch Me Pull A Rabbit Out My Hat
While CPI and PPI are doctored beyond belief and thus widely reported as being
benign, an alternative [much less but still
meddled with] measure of inflation - the CRB
index - is hovering near all time highs:
So, while countless asset prices are setting all time high price records
in nominal terms with empirical evidence of inflation rife throughout the
economy - precious metals, the historic inflation hedges - remain stuck in
the weeds, struggling to attain levels barely half of what they were in the
early 1980's in nominal terms. All of this despite severe and growing
supply demand imbalances in both silver and gold.
Quacks Like A Duck
Recently, a man widely viewed as the bridesmaid to Ben Bernanke as a likely
choice to head the Federal Reserve wrote an Op
Ed piece in the Financial Times. To anyone with more smarts than a grapefruit
- he was "dropping hints" that statistical accounts being served up by officialdom
are at least misleading - or perhaps patently false. I would like you all to
read my savvy friend Jesse's take
on what Martin Feldstein said,
 [He]
basically said that the whole yield curve distortion was being caused by
official intervention by the central banks? And that much of the 'private'
buying was really being done by the banks through intermediaries?
Feldstein was right, and everything I thought, everything I feared about
what the Fed is doing, is true. They are experimenting, making it up as they
go along. They don't have the theory to explain what happens if the world
powers do not agree finally to a centralized global monetary policy group.
This makes what they are doing to drive people away from the safety of gold
criminal, beyond policy implementation and beyond mere negligence. It is
like blocking the fire escapes and exits because they observed that in fires
people stream from the exits, so they think that they can prevent a fire
by preventing people from escaping. If no one is running from the building,
it must not be a fire.
They might get lucky. But if they are wrong again, as they were in the 1930's,
there will be hell to pay.
It says here that too many folks have been brainwashed by a mainstream media
that is all too quick to "label" anyone critical of the status quo. Last week,
Canada's Globe and Mail ran a piece titled, Launch
of Iranian oil trading hits wall. Not surprisingly, the article characterized
those who view the proposed Iranian Oil Bourse "destabilizing" as conspiracy
theorists - and by extension, the postulated ill effects of such as a chimera,
...There has been far less talk about the planned bourse in the mainstream
media than on the Internet, particularly on websites aimed at gold bugs and
other economic conspiracy theorist[s] sic.
The theory is that all trades through the new bourse would be made in euros,
not the U.S. dollar, which for decades has been the world's primary reserve
currency, as well as the one in which oil and most other commodities have
been priced. As a result, European nations and other countries, especially
Middle East oil producers, tired of having to buy billions of now weakening
greenbacks to pay for their energy purchases, would no longer have to do
so.
This, the conspiracy theorists contend, would knock the stuffing out of
the U.S. currency and hasten the decline and fall of the American Empire,
all the while allowing Iran to stick it to the Great Satan....
This type of reporting has an eerie similarity to main stream media accounts
of the ongoing conflict in Afghanistan and Iraq - why we're there and that
all is well and good - because we-the-good-guys - occupy the moral high ground.
We know because CNN tells us so; questioning this dogma inevitably ends with
the offender's patriotism being questioned.
To this I say, is it also a "conspiracy" or unpatriotic to state that fish
are disappearing from the oceans, the supply of oil is forecasted to be unable
to keep up with demand, the globe is being deforested, animal and plant species
are going extinct and to discuss why water wars are possibly in the offing?
Speaking of Good Guys.....These Guys Sure Are Good
Last week's
write up dealt with Goldman Sachs' "short gold position" and proposed
changes to the Tokyo Commodities Exchange [TOCOM]. Subsequently, Goldman
released their Q1 '06 earnings and I'll be you'd never guess - they beat
the street. It's not so much that Goldman 'beat the street' that makes me
raise an eyebrow - it's how. Here's a third party commentary from what is
widely viewed as a reputable voice on Wall Street doings. This is an excerpt
from the Bill King Report March 15, 2006 - that comes to us via Bill Murphy's
daily Midas commentary at Lemetropolecafe:
According to a Sanford Bernstein report on Goldman Sachs earnings, Goldie's
institutional equity commissions increased 5% sequentially from Q4 '05 but
proprietary trading revenues increased 167% sequentially. Equity proprietary
trading revenue increased 33 times more than commissions. It must be the
aggregate acumen of all those ex-Treasury and Fed officials that now reside
at Goldie that is giving their traders such an edge in minting profits.
Sanford Bernstein's Brad Hintz writes, "In Goldman's new model, proprietary
trading revenues and equity derivatives profitability are helping offset
the decline of commission rates in its low touch, low cost execution business.
And after much complaining, Goldman's equity clients appear to be accepting
the fact of their changed relationship with the trading desks of GS."
Funny thing that perhaps reporters in the mainstream forgot - Goldman's "call" for
the price of gold in 2006 is/was 515.00. With gold currently trading north
of 550.00, this should really surprise nobody, since Goldman's highly publicized "calls" on
gold have consistently and perennially been 'wrong' since the bull market began
back in the fall of 1999. Apparently, their proprietary traders are singing
from a different hymn book, or, do they simply "will the ball into the end
zone" while running the wrong plays?
You see folks, Jane and Joe Sixpack are waking up to the notion that things
are not as they should be. An alert reader sent me this link - informing me
that this
excerpt from the recent "Stick It" episode of Boston
Legal - which he informed mehas created quite a stir in the
herd - around the water coolers of offices - in what's left of the yet-to-be-outsourced
in America [text appended below]:
Hollywood Endings?
 Alan
Shore's closing argument - Boston Legal:
Alan Shore : When the weapons of mass destruction thing turned out
to be not true, I expected the American people to rise up. Ha! They didn't.
Then, when the Abu Ghraib torture thing surfaced and it was revealed that
our government participated in rendition, a practice where we kidnap people
and turn them over to regimes who specialize in torture, I was sure then
the American people would be heard from. We stood mute.
Then came the news that we jailed thousands of so-called terrorists suspects,
locked them up without the right to a trial or even the right to confront
their accusers. Certainly, we would never stand for that. We did.
And now, it's been discovered the executive branch has been conducting massive,
illegal, domestic surveillance on its own citizens. You and me. And I at
least consoled myself that finally, finally the American people will have
had enough. Evidentially, we haven't.
In fact, if the people of this country have spoken, the message is we're
okay with it all. Torture, warrantless search and seizure, illegal wiretappings,
prison without a fair trial - or any trial, war on false pretenses. We, as
a citizenry, are apparently not offended.
There are no demonstrations on college campuses. In fact, there's no clear
indication that young people seem to notice.
Well, Melissa Hughes noticed. Now, you might think, instead of withholding
her taxes, she could have protested the old fashioned way. Made a placard
and demonstrated at a Presidential or Vice-Presidential appearance, but we've
lost the right to that as well. The Secret Service can now declare free speech
zones to contain, control and,
Stop for a second and try to fathom that.
At a presidential rally, parade or appearance, if you have on a supportive
t-shirt, you can be there. If you are wearing or carrying something in protest,
you can be removed.
This, in the United States of America. This in the United States of America.
Is Melissa Hughes the only one embarrassed?
*Alan sits down abruptly in the witness chair next to the judge*
Judge Robert Sanders: Mr. Shore. That's a chair for witnesses only.
Really long speeches make me so tired sometimes.
Judge Sanders: Please get out of the chair.
Alan: Actually, I'm sick and tired.
Judge Sanders: Get out of the chair!
Alan: And what I'm most sick and tired of is how every time somebody
disagrees with how the government is running things, he or she is labeled
unAmerican.
U.S. Attorney Jonathan Shapiro: Evidentally, it's speech time.
Alan: And speech in this country is free, you hack! Free for me,
free for you. Free for Melissa Hughes to stand up to her government and say "Stick
it"!
U.S. Attorney Jonathan Shapiro: Objection!
Alan: I object to government abusing its power to squash the constitutional
freedoms of its citizenry. And, God forbid, anybody challenge it. They're
smeared as being a heretic. Melissa Hughes is an American. Melissa Hughes
is an American. Melissa Hughes is an American!
Judge Sanders: Mr. Shore. Unless you have anything new and fresh
to say, please sit down. You've breached the decorum of my courtroom with
all this hooting.
Alan: Last night, I went to bed with a book. Not as much fun as a
29 year old, but the book contained a speech by Adlai Stevenson. The year
was 1952. He said, "The tragedy of our day is the climate of fear in which
we live and fear breeds repression. Too often, sinister threats to the Bill
of Rights, to freedom of the mind are concealed under the patriotic cloak
of anti-Communism."
Today, it's the cloak of anti-terrorism. Stevenson also remarked, "It's far
easier to fight for principles than to live up to them."
I know we are all afraid, but the Bill of Rights - we have to live up to that.
We simply must. That's all Melissa Hughes was trying to say. She was speaking
for you. I would ask you now to go back to that room and speak for her.
"It's far easier to fight for principles than to live up to them".
NewBank...Same Old Story
For those of you who may be unaware, another small
item sailed in under the radar in late February that - for some reason
- failed to garner any attention in the main stream financial press.
New York, NY - The Bond Market Association announced today that it
has accepted an invitation by a private-sector working group established
by the U.S. Federal Reserve Board to develop and lead the creation of a so-called
'NewBank', a standby bank that would only be activated if one of two existing
clearing banks in the U.S. government securities markets was suddenly forced
to leave the business....
Without sounding too conspiratorial - why would you suppose either J.P. Morgan
or Bank of New York would be "forced to leave" the market anyway? I mean, it
says right in the article,
"...that the standby bank is not designed to address resiliency problems
such as those encountered after 9/11; regulators previously established resiliency
standards necessary for participation by a clearing bank ...."
So, if we were to compose a list of the potential things that could cause
such an event - do you think we would be "labeled" conspiracy theorists? Furthermore,
does anyone wonder why this development has not been covered in the mainstream
financial press? Perhaps they are waiting for Hollywood or even Boston Legal
to do the subject justice?
What bothers me so much about what is occurring in our financial markets is
that like our much valued democracy, free speech with all the trimmings - it's
being supplanted and replaced by an all knowing unyielding corporate-ocracy
who act as if they are above the established and accepted code of conduct.
Perhaps even more frightening than that - we've come to the point that we must
now rely on Hollywood to inform us. Sadly, our mainstream media has abdicated
that responsibility - all lies and jest.
"A Republic if you can keep it". - Another Ben - not Bernanke,
but Franklin - at the close of the Constitutional Convention in Philadelphia
on September 18, 1787
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